In the Chancellor’s Autumn Statement of last week, Philip Hammond announced:
“In the private rental market, letting agents are currently able to charge unregulated fees to tenants. We have seen these fees spiral, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet their fees. So I can announce today that we will ban fees to tenants as soon as possible.”
Under the Consumer Rights Act 2015, agents are required to publicise their fees to both landlords and tenants in their offices and website. Such tenant charges include administrative fees for references and credit checks. It is these fees that the Government will ban at some point in the future.
The announcement appears to have been made to address the current housing crisis with rents rising and home ownership falling. However, these fees are banned in Scotland and there is no comprehensive market research which demonstrates that the ban has benefitted or harmed the market. As such, in England there is a fear that these costs will be passed to landlords who may respond by raising rents. In Wales, it is unclear whether the ban will apply and whether or not the Chancellor has the power to do so.
Further licensing or registering agents was not mentioned by the Chancellor but it is certainly something to consider if the Government is keen to ensure that agent’s fees are charged at a reasonable rate.
A consultation is to be published in January 2017 but it seems that this will be more about the form of such a ban and not about whether or not it should occur. Updates will be posted as and when we receive further information.